Survey: Business leaders lack optimism
More than half of the state's business leaders expect economic conditions to be worse this year than they were in 2012, according to a survey released Wednesday by the state's largest business association.
The Connecticut Business & Industry Association reported that 52 percent of leaders responding to a fourth-quarter survey - compared with 44 percent in the previous quarter - said the state's economy would likely take a dip this year. Only 14 percent who responded to the latest survey saw a brighter outlook ahead.
Business leaders appeared to have a more optimistic outlook toward the national economy, with 40 percent saying conditions would likely get worse this year. That's a 4-point rise, however, from expectations given three months ago, which means pessimism is up.
"There's a lot of uncertainty out there, driven in part by Washington's failure to fully resolve the fiscal cliff issues and the ongoing threats to defense spending," Peter Gioia, a CBIA economist, said in a statement.
The uncertainty has spread into hiring expectations as well, with only 18 percent of survey respondents expecting to hire in the next quarter. Nineteen percent plan workforce reductions.
A separate analysis released Wednesday by Don Klepper-Smith, chief economist and director of research at DataCore Partners in New Haven, said part of Connecticut's economic problems can be traced to disparities between the average resident's earnings and the cost of state government. He said a "growing tension" has emerged because, over more than two decades, state spending has climbed 284 percent, while incomes have risen only 173 percent.
"The state tax burden has become more onerous for its residents," Klepper-Smith said in a note to clients.
The differences between rising state budgets and elevated personal incomes are small in any given year, he said, but on a compounded basis the disparity is huge.
"State government spending has vastly outpaced consumers' ability to pay for it, undermining our long-term economic competitiveness," Klepper-Smith said. "The challenge to Connecticut is clear: What ratio of spending cuts to tax increases makes the most sense, not for the short-run but for the longer term. ...?"
• 52 percent expect economic conditions in Connecticut to get worse this year; 14 percent think conditions will get better; 34 percent see no change.
• 34 percent expect to see boosts in production and sales, with only 21 percent seeing decreases.
• 18 percent expect to add jobs; 19 percent plan to shed jobs.
• 27 percent expect an improved outlook for their firms; 22 percent see declines ahead.
• In their specific industry, 23 percent of executives expect improving conditions; 28 percent are bracing for declines.
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